Turning Point Brands, Inc.

Previous wording

The following Management’s Discussion and Analysis (“MD&A”) relates to the unaudited financial statements of Turning Point Brands, Inc., included elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to enable the reader to understand the Company’s financial condition and results of operations, including any material changes in the Company’s financial condition and results of operations since December 31, 2025, and as compared with thethree and six months ended June 30, 2025*.* The MD&A is provided as a supplement to and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly report on Form 10-Q, as well as“Management’s Discussion and Analysis of Financial Condition and Results of Operations”* contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the*“2025 Annual Report”).

Current wording

The following Management’s Discussion and Analysis (“MD&A”) relates to the unaudited financial statements of Turning Point Brands, Inc., included elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to enable the reader to understand the Company’s financial condition and results of operations, including any material changes in the Company’s financial condition and results of operations since December 31, 2025, and as compared with thethree and nine months ended September 30, 2025*.* The MD&A is provided as a supplement to and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly report on Form 10-Q, as well as“Management’s Discussion and Analysis of Financial Condition and Results of Operations”* contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the*“2025 Annual Report”).

Previous wording

Turning Point Brands, Inc. is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s® and our next-generation products to fulfill evolving consumer preferences. Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada and positively evolving consumer perception and acceptance in North America. The OTP industry, which consists of non-cigarette tobacco products, exhibited flat consumer unit annualized growth during the full year period ended 2025 as reported by MSAi a third-party analytics and information company. Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment. Our businesses generate solid cash flow which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 900 distributors with an additional approximately 600 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and tobacco industries, we have grown and diversified our business through new product launches, category expansions and acquisitions while concurrently improving operational efficiency.

Current wording

Turning Point Brands, Inc. is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s® and our next-generation products to fulfill evolving consumer preferences. Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada and positively evolving consumer perception and acceptance in North America. The OTP industry, which consists of non-cigarette tobacco products, exhibited flat consumer unit annualized growth during the full year period ended 2025 as reported by MSAi a third-party analytics and information company. Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment. Our businesses generate solid cash flow which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 900 distributors with an additional approximately 600 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and nicotine industries, we have grown and diversified our business through new product launches, category expansions and acquisitions while concurrently improving operational efficiency.

Previous wording

We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in approximately 220,000 retail locations in North America. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.

Current wording

We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in more than 220,000 retail locations in North America. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.

Previous wording

The ruling did not address the availability, timing, or amount of any potential refunds. Subsequently, the U.S. Court of International Trade ("CIT") ordered U.S. Customs and Border Protection ("CBP") to refund the collected IEEPA tariffs. On April 20, 2026, CBP launched the Consolidated Administration and Processing of Entries ("CAPE") system to facilitate IEEPA tariff refunds. In June 2026, the Company received approximately $17.8 million of tariff refunds from CBP related to previously paid IEEPA tariffs. The refund consisted of $5.5 million in costs that were capitalized and on the balance sheet with the remaining $12.3 million recognized as a reduction of cost of goods sold.

Current wording

The ruling did not address the availability, timing, or amount of any potential refunds. Subsequently, the U.S. Court of International Trade ("CIT") ordered U.S. Customs and Border Protection ("CBP") to refund the collected IEEPA tariffs. On April 20, 2026, CBP launched the Consolidated Administration and Processing of Entries ("CAPE") system to facilitate IEEPA tariff refunds. In June 2026, the Company received approximately $17.8 million of tariff refunds from CBP related to previously paid IEEPA tariffs. Based upon the nature of the underlying tariff charges, the refund resulted in a $12.3 million reduction in cost of goods sold for inventory sold while $1.2 million reduced PPE as the payments had been capitalized for equipment purchases and $4.3 million reduced inventory as the payments had been capitalized as part of inventory and was not sold at the time of refund.

Previous wording

Net Sales: For the three months ended June 30, 2026, consolidated net sales increased $26.3 million, or 22.6% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

Current wording

Net Sales: For the three months ended September 30, 2026, consolidated net sales increased $32.1 million, or 27.0% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

Previous wording

For the three months ended June 30, 2026, net sales in the Zig-Zag products segment decreased$11.6 million, or 24.8% compared to the prior year period. The decrease in net sales was driven primarily by declines of $4.7 million in U.S. papers and wraps, $6.2 million in the Clipper lighter business, and $1.0 million in our Canadian products. We were able to sell the majority of the Clipper inventory in the prior year and do not expect meaningful additional revenue from Clipper in future periods.

Current wording

For the three months ended September 30, 2026, net sales in the Zig-Zag products segment decreased$6.8 million, or 15.5% compared to the prior year period. The decrease in net sales was driven primarily by declines of $3.1 million in U.S. papers and wraps, $2.9 million in our Canadian products, and $0.1 million in the Clipper lighter business. We were able to sell the majority of the Clipper inventory in the prior year and do not expect meaningful additional revenue from Clipper in future periods.

Previous wording

For the three months ended June 30, 2026, net sales in the Stoker’s products segment increased $38.0 million, or 54.5% compared to the prior year period. The increase in net sales was primarily driven by $38.4 million of growth in modern oral products.

Current wording

For the three months ended September 30, 2026, net sales in the Stoker’s products segment increased $38.9 million, or 52.0% compared to the prior year period. The increase in net sales was primarily driven by $37.7 million of growth in modern oral products.

Previous wording

Gross Profit: For the six months ended June 30, 2026, consolidated gross profit increased $35.8 million, or 28.3% compared to the prior year period. Gross profit as a percentage of net sales increased to 60.6% for the six months ended June 30, 2026, compared to 56.6% for the six months ended June 30, 2025. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment, margin contribution from modern oral products and $12.3 million reduction in cost of sales as a result of tariff refunds.

Current wording

Gross Profit: For the three months ended September 30, 2026, consolidated gross profit increased $14.7 million, or 20.9% compared to the prior year period. Gross profit as a percentage of net sales decreased to 56.4% for the three months ended September 30, 2026, compared to 59.2% for the three months ended September 30, 2025. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment.

Previous wording

For the three months ended June 30, 2026, gross profit in the Zig-Zag products segment decreased $0.5 million, or 2.1% compared to the prior year period. Gross profit as a percentage of net sales increased to 63.9% of net sales for the three months ended June 30, 2026, from 49.1% of net sales for the three months ended June 30, 2025, driven primarily by product mix and by $2.4 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the three months ended September 30, 2026, gross profit in the Zig-Zag products segment decreased $4.0 million, or 15.6% compared to the prior year period. Gross profit as a percentage of net sales decreased to 57.4% of net sales for the three months ended September 30, 2026, from 57.5% of net sales for the three months ended September 30, 2025, driven primarily by product mix.

Previous wording

Selling, General, and Administrative Expenses: For the three months ended June 30, 2026, selling, general, and administrative expenses increased $36.7 million, or 91.1% compared to the prior year period, primarily due to increased shipping and selling costs related to the increase in modern oral sales, increased salaries and benefits resulting from additional sales headcount, and higher sales and advertising expenses to support the modern oral growth in the quarter compared to the prior year period. Selling, general and administrative expenses in the three months ended June 30, 2026, included $3.2 million of expense related to PMTA, $2.7 million of stock options, restricted stock and incentives expense, $0.7 million of legal expenses incurred in connection with litigation related to an insurance claim, and $0.1 million of expense related to corporate restructuring. Selling, general and administrative expenses in the three months ended June 30, 2025, included $1.6 million of stock options, restricted stock and incentives expense, $1.7 million of expense related to PMTA, $0.8 million of elevated non-recurring outbound freight costs due to ERP transition, $0.5 million of legal expenses incurred in connection with litigation related to an insurance claim, and $0.6 million of transaction costs.

Current wording

Selling, General, and Administrative Expenses: For the three months ended September 30, 2026, selling, general, and administrative expenses increased $30.8 million, or 69.1% compared to the prior year period, primarily due to increased shipping and selling costs related to the increase in modern oral sales, increased salaries and benefits resulting from additional sales headcount, and higher sales and advertising expenses to support the modern oral growth in the quarter compared to the prior year period. Selling, general and administrative expenses in the three months ended September 30, 2026, included $3.2 million of expense related to PMTA, $0.9 million of stock options, restricted stock and incentives expense, $0.6 million of legal expenses incurred in connection with litigation related to an insurance claim, and $0.3 million of expense related to corporate restructuring. Selling, general and administrative expenses in the three months ended September 30, 2025, included $1.9 million of stock options, restricted stock and incentives expense, $0.5 million of expense related to PMTA, $0.4 million of legal expenses incurred in connection with litigation related to an insurance claim, $0.8 million of transaction costs, and $0.2 million of expense related to corporate restructuring.

Previous wording

Operating Income: For the six months ended June 30, 2026, consolidated operating income decreased $20.3 million, or 41.0% compared to the prior year period. Operating income as a percentage of net sales decreased to 10.9% of net sales for the six months ended June 30, 2026 from 22.2% of net sales for the six months ended June 30, 2025, primarily driven by increased selling, general and administrative costs, partially offset by $12.3 million reduction in cost of sales as a result of tariff refunds.

Current wording

Operating Income: For the three months ended September 30, 2026, consolidated operating income decreased $16.0 million, or 61.9% compared to the prior year period. Operating income as a percentage of net sales decreased to 6.5% of net sales for the three months ended September 30, 2026 from 21.8% of net sales for the three months ended September 30, 2025, primarily driven by increased selling, general and administrative costs.

Previous wording

For the three months ended June 30, 2026, operating income in the Zig-Zag products segment decreased $6.0 million, or 40.6% compared to the prior year period. Operating income as a percentage of net sales decreased to 24.7% of net sales for the three months ended June 30, 2026 from 31.4% of net sales for the three months ended June 30, 2025, primarily driven by an increase in sales and marketing costs, partially offset by $2.4 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the three months ended September 30, 2026, operating income in the Zig-Zag products segment decreased $4.7 million, or 30.1% compared to the prior year period. Operating income as a percentage of net sales decreased to 29.2% of net sales for the three months ended September 30, 2026 from 35.3% of net sales for the three months ended September 30, 2025, primarily driven by an increase in sales and marketing costs.

Previous wording

For the six months ended June 30, 2026, operating income in the Stoker’s products segment decreased $4.5 million, or 8.3% compared to the prior year period. Operating income as a percentage of net sales decreased to 25.5% of net sales for the six months ended June 30, 2026 from 42.1% of net sales for the six months ended June 30, 2025, primarily driven by higher sales and marketing costs, margin contribution of modern oral products offset by $9.9 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the three months ended September 30, 2026, operating income in the Stoker’s products segment decreased $7.2 million, or 24.7% compared to the prior year period. Operating income as a percentage of net sales decreased to 19.4% of net sales for the three months ended September 30, 2026 from 39.1% of net sales for the three months ended September 30, 2025, primarily driven by higher sales and marketing costs offset by margin contribution of modern oral products.

Previous wording

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the three months ended June 30, 2026, unallocated costs were $22.0 million compared to $18.5 million in the prior year period, an increase of $3.5 million or 18.8%, primarily driven by joint venture related corporate expenses.

Current wording

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the three months ended September 30, 2026, unallocated costs were $23.1 million compared to $19.0 million in the prior year period, an increase of $4.1 million or 21.6%, primarily driven by a $2.7 million increase in costs related to PMTA and joint venture related corporate expenses.

Previous wording

**Other Expense, net:**For the three months ended June 30, 2026, other expense increased $0.1 million compared to the prior year period due to an honorarium gift in the current year period that was not made in the prior year period.

Current wording

**Other Expense (Income), net:**For the three months ended September 30, 2026, other expense increased $5.0 million compared to the prior year period due to an employee retention credit refund received in the prior-year period.

Previous wording

Income From Equity Method Investments: For the three months ended June 30, 2026, income from investments in equity securities increased $2.7 million compared to the prior year period as a result of GWO.

Current wording

Income From Equity Method Investments: For the three months ended September 30, 2026, income from investments in equity securities increased $0.4 million compared to the prior year period as a result of GWO.

Previous wording

Income Tax (Benefit) Expense:** **Our income tax expense of $0.9 million was 3.5% of income before income taxes for the six months ended June 30, 2026. Our effective income tax rate was 16.1% for the six months ended June 30, 2025. The change in tax rate is primarily attributable to the release of a valuation allowance on deferred tax assets in the current year period.

Current wording

Income Tax Expense:** **Our income tax expense of $1.4 million was 17.1% of income before income taxes for the three months ended September 30, 2026. Our effective income tax rate was 21.4% for the three months ended September 30, 2025. The change in tax rate is primarily attributable to favorable discrete tax benefits related to stock-based compensation.

Previous wording

Net Income Attributable to Non-Controlling Interest:** **Net income attributable to non-controlling interest was $6.7 million and $2.5 million, respectively, for the three months ended June 30, 2026 and 2025. The increase in non-controlling interest compared to the prior year period is primarily due to higher sales volumes and improved net income of our joint venture.

Current wording

Net Income Attributable to Non-Controlling Interest:** **Net income attributable to non-controlling interest was $2.9 million and $2.7 million, respectively, for the three months ended September 30, 2026 and 2025. The increase in non-controlling interest compared to the prior year period is primarily due to higher sales volumes and improved net income of our joint venture.

Previous wording

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the three months ended June 30, 2026 and 2025, was $3.6 million and $14.5 million, respectively.

Current wording

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the three months ended September 30, 2026 and 2025, was $3.9 million and $21.1 million, respectively.

Previous wording

Comparison of the Six Months Ended June 30, 2026, to the Six Months Ended June 30, 2025

Current wording

Comparison of the Nine Months Ended September 30, 2026, to the Nine Months Ended September 30, 2025

Previous wording

Net Sales: For the six months ended June 30, 2026, consolidated net sales increased $44.2 million, or 19.8% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

Current wording

Net Sales: For the nine months ended September 30, 2026, consolidated net sales increased $76.3 million, or 22.3% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

Previous wording

For the six months ended June 30, 2026, net sales in the Zig-Zag products segment decreased $22.2 million, or 23.6% compared to the prior year period. The decrease in net sales was driven primarily by declines of $12.0 million in U.S. papers and wraps, $8.0 million in the Clipper lighter business, and $2.0 million in our Canadian products. We were able to sell the majority of the Clipper inventory in the prior year and do not expect meaningful additional revenue from Clipper in future periods.

Current wording

For the nine months ended September 30, 2026, net sales in the Zig-Zag products segment decreased $29.1 million, or 21.0% compared to the prior year period. The decrease in net sales was driven primarily by declines of $15.1 million in U.S. papers and wraps, $8.1 million in the Clipper lighter business, and $4.8 million in our Canadian products. We were able to sell the majority of the Clipper inventory in the prior year and do not expect meaningful additional revenue from Clipper in future periods.

Previous wording

For the six months ended June 30, 2026, net sales in the Stoker’s products segment increased $66.4million, or 51.6% compared to the prior year period. The increase in net sales was primarily driven by growth in modern oral products.

Current wording

For the nine months ended September 30, 2026, net sales in the Stoker’s products segment increased $105.3 million or 51.7% compared to the prior year period. The increase in net sales was primarily driven by growth in modern oral products.

Previous wording

Gross Profit: For the three months ended June 30, 2026, consolidated gross profit increased $27.1 million, or 40.6% compared to the prior year period. Gross profit as a percentage of net sales increased to 65.5% for the three months ended June 30, 2026, compared to 57.1% for the three months ended June 30, 2025. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment, margin contribution from modern oral products, and $12.3 million reduction in cost of sales as a result of tariff refunds.

Current wording

Gross Profit: For the nine months ended September 30, 2026, consolidated gross profit increased $50.5 million, or 25.7% compared to the prior year period. Gross profit as a percentage of net sales increased to 59.1% for the nine months ended September 30, 2026, compared to 57.5% for the nine months ended September 30, 2025. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment, margin contribution from modern oral products and $12.3 million reduction in cost of sales as a result of tariff refunds.

Previous wording

For the six months ended June 30, 2026, gross profit in the Zig-Zag products segment decreased $5.1 million, or 10.5% compared to the prior year period. Gross profit as a percentage of net sales increased to 60.5% of net sales for the six months ended June 30, 2026, from 51.6%of net sales for the six months ended June 30, 2025, driven primarily by product mix, and $2.4 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the nine months ended September 30, 2026, gross profit in the Zig-Zag products segment decreased $9.1 million, or 12.2% compared to the prior year period. Gross profit as a percentage of net sales increased to 59.4% of net sales for the nine months ended September 30, 2026, from 53.5%of net sales for the nine months ended September 30, 2025, driven primarily by product mix, and $2.4 million reduction in cost of sales as a result of tariff refunds.

Previous wording

For the six months ended June 30, 2026, gross profit in the Stoker’s products segment increased $40.9 million, or 52.7% compared to the prior year period. Gross profit as a percentage of net sales increased to 60.7% of net sales for the six months ended June 30, 2026, from 60.2% of net sales for the six months ended June 30, 2025, primarily driven by net sales growth, margin contribution from modern oral products and $9.9 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the nine months ended September 30, 2026, gross profit in the Stoker’s products segment increased $59.6 million, or 48.6% compared to the prior year period. Gross profit as a percentage of net sales decreased to 59.0% of net sales for the nine months ended September 30, 2026, from 60.2% of net sales for the nine months ended September 30, 2025, primarily driven by net sales growth and margin contribution from modern oral products, partially offset by a $9.9 million reduction in cost of sales as a result of tariff refunds.

Previous wording

Selling, General, and Administrative Expenses: For the six months ended June 30, 2026, selling, general, and administrative expenses increased $56.1 million, or 73.1% compared to the prior year period primarily due to increased shipping and selling costs related to the increase in modern oral sales, increased salaries and benefits resulting from additional sales headcount, and higher sales and advertising expenses in the current year period compared to the prior year period. Selling, general and administrative expenses in the six months ended June 30, 2026, included $3.5 million of expense related to PMTA, $5.6 million of stock options, restricted stock and incentives expense, $0.8 million of legal expenses incurred in connection with litigation related to an insurance claim, and $0.2 million of expense related to corporate restructuring. Selling, general and administrative expenses in the six months ended June 30, 2025, included $3.2 million of expense related to PMTA, $3.3 million of stock options, restricted stock and incentives expense, $0.7 million of transaction costs, and $0.2 million of expense related to the implementation of the new ERP and CRM systems.

Current wording

Selling, General, and Administrative Expenses: For the nine months ended September 30, 2026, selling, general, and administrative expenses increased $86.8 million, or 71.6% compared to the prior year period primarily due to increased shipping and selling costs related to the increase in modern oral sales, increased salaries and benefits resulting from additional sales headcount, and higher sales and advertising expenses in the current year period compared to the prior year period. Selling, general and administrative expenses in the nine months ended September 30, 2026, included $6.6 million of expense related to PMTA, $6.6 million of stock options, restricted stock and incentives expense, $1.5 million of legal expenses incurred in connection with litigation related to an insurance claim, and $0.5 million of expense related to corporate restructuring. Selling, general and administrative expenses in the nine months ended September 30, 2025, included $3.7 million of expense related to PMTA, $5.2 million of stock options, restricted stock and incentives expense, $1.6 million of transaction costs, and $0.2 million of expense related to the implementation of the new ERP and CRM systems, $0.9 million of legal expenses incurred in connection with litigation connected to an insurance claim, and $0.8 million of elevated non-recurring outbound freight costs due to the ERP transition.

Previous wording

Operating Income: For the three months ended June 30, 2026, consolidated operating income decreased $9.6 million, or 36.5% compared to the prior year period. Operating income as a percentage of net sales decreased to 11.7% of net sales for the three months ended June 30, 2026 from 22.6% of net sales for the three months ended June 30, 2025, primarily driven by increased selling, general and administrative costs, partially offset by $12.3 million reduction in cost of sales as a result of tariff refunds.

Current wording

Operating Income: For the nine months ended September 30, 2026, consolidated operating income decreased $36.3 million, or 48.2% compared to the prior year period. Operating income as a percentage of net sales decreased to 9.3% of net sales for the nine months ended September 30, 2026 from 22.0% of net sales for the nine months ended September 30, 2025, primarily driven by increased selling, general and administrative costs, partially offset by $12.3 million reduction in cost of sales as a result of tariff refunds.

Previous wording

For the six months ended June 30, 2026, operating income in the Zig-Zag products segment decreased $11.7 million, or 36.9% compared to the prior year period. Operating income as a percentage of net sales decreased to 27.7% of net sales for the six months ended June 30, 2026 from 33.6% of net sales for the six months ended June 30, 2025, primarily driven by an increase in sales and marketing costs offset by improved margins on product mix and $2.4 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the nine months ended September 30, 2026, operating income in the Zig-Zag products segment decreased $16.4 million, or 34.7% compared to the prior year period. Operating income as a percentage of net sales decreased to 28.2% of net sales for the nine months ended September 30, 2026 from 34.1% of net sales for the nine months ended September 30, 2025, primarily driven by an increase in sales and marketing costs offset by improved margins on product mix and $2.4 million reduction in cost of sales as a result of tariff refunds.

Previous wording

For the three months ended June 30, 2026, operating income in the Stoker’s products segment decreased $0.2 million, or 0.5% compared to the prior year period. Operating income as a percentage of net sales decreased to 27.8% of net sales for the three months ended June 30, 2026 from 43.2% of net sales for the three months ended June 30, 2025, primarily driven by higher sales and marketing costs offset by margin contribution of modern oral products and $9.9 million reduction in cost of sales as a result of tariff refunds.

Current wording

For the nine months ended September 30, 2026, operating income in the Stoker’s products segment decreased $11.8 million, or 14.1% compared to the prior year period. Operating income as a percentage of net sales decreased to 23.2% of net sales for the nine months ended September 30, 2026 from 41.0% of net sales for the nine months ended September 30, 2025, primarily driven by higher sales and marketing costs and margin contribution of modern oral products offset by $9.9 million reduction in cost of sales as a result of tariff refunds.

Previous wording

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the six months ended June 30, 2026, unallocated costs were $40.5 million compared to $36.4 million in the prior year period, an increase of $4.1 million or 11.3%, primarily driven by joint venture related corporate expenses.

Current wording

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the nine months ended September 30, 2026, unallocated costs were $63.6 million compared to $55.4 million in the prior year period, an increase of $8.2 million or 14.8%, primarily driven by joint venture related corporate expenses and a $2.9 million increase in costs related to PMTA.

Previous wording

Interest Expense, net: For the three months ended June 30, 2026, interest expense, net decreased $0.9 million or 17.3% due to an increase in interest income as a result of interest of $0.6 million received on the tariff refund.

Current wording

Interest Expense, net: For the nine months ended September 30, 2026, interest expense, net decreased $0.2 million or 1.3% primarily due to an increase in interest income as a result of interest of $0.6 million received on the tariff refund.

Previous wording

Investment Loss (Gain): For the six months ended June 30, 2026, investment loss was $0.9 million compared to investment income of $0.5 million in the prior-year period, primarily due to higher realized loss from a non-cash valuation adjustment during the period.

Current wording

Investment Loss (Gain): For the nine months ended September 30, 2026, investment loss was $0.8 million compared to investment income of $0.9 million in the prior-year period, primarily due to a non-cash valuation adjustment during the period.

Previous wording

Income From Equity Method Investments: For the six months ended June 30, 2026, income from investments in equity securities increased $5.9 million compared to the prior year period as a result of GWO.

Current wording

Income From Equity Method Investments: For the nine months ended September 30, 2026, income from investments in equity securities increased $5.9 million compared to the prior year period primarily as a result of GWO.

Previous wording

**Loss on Extinguishment of Debt:**There was no loss on extinguishment of debt for the six months ended June 30, 2026. Loss on extinguishment of debt for the six months ended June 30, 2025 was $1.2 million as a result of the redemption of the 2026 Notes in February 2025.

Current wording

**Loss on Extinguishment of Debt:**There was no loss on extinguishment of debt for the nine months ended September 30, 2026. Loss on extinguishment of debt for the nine months ended September 30, 2025 was $1.2 million as a result of the redemption of the 2026 Notes in February 2025.

Previous wording

Income Tax Expense:** **Our income tax expense of $3.7 million was 26.3% of income before income taxes for the three months ended June 30, 2026. Our effective income tax rate was 20.0% for the three months ended June 30, 2025. The change in tax rate is primarily attributable to the release of a valuation allowance on deferred tax assets in the current year period.

Current wording

Income Tax Expense:** **Our income tax expense of $2.3 million was 6.9% of income before income taxes for the nine months ended September 30, 2026. Our effective income tax rate was 18.4% for the nine months ended September 30, 2025. The change in tax rate is primarily attributable to the release of a valuation allowance on deferred tax assets in the current year period.

Previous wording

Net Income Attributable to Non-Controlling Interest:** **Net income attributable to non-controlling interest was $9.0 million and $3.9 million, respectively, for the six months ended June 30, 2026 and 2025. The increase in non-controlling interest compared to the prior year period is primarily due to higher sales volumes and improved net income of our joint venture as well as tariff refunds related to products sold through our joint venture company.

Current wording

Net Income Attributable to Non-Controlling Interest:** **Net income attributable to non-controlling interest was $11.9 million and $6.6 million, respectively, for the nine months ended September 30, 2026 and 2025. The increase in non-controlling interest compared to the prior year period is primarily due to higher sales volumes and improved net income of our joint venture as well as tariff refunds related to products sold through our joint venture company.

Previous wording

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the six months ended June 30, 2026 and 2025, was $15.3 million and $28.9 million, respectively.

Current wording

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the nine months ended September 30, 2026 and 2025, was $19.2 million and $50.0 million, respectively.

Previous wording

As of June 30, 2026, we have $268.3 million of cash on hand and $70.7 million of availability under the 2023 ABL Facility. We have no borrowings outstanding under our 2023 ABL Facility as of June 30, 2026. Our principal uses for cash are working capital, debt service, and capital expenditures.

Current wording

As of September 30, 2026, we have $251.3 million of cash on hand and $71.5 million of availability under the 2023 ABL Facility. We have no borrowings outstanding under our 2023 ABL Facility as of September 30, 2026. Our principal uses for cash are working capital, debt service, and capital expenditures.

Previous wording

Our adjusted working capital, which we define as current assets less cash and current liabilities, increased $24.2 million compared to the prior year end. The increase in working capital is primarily the result of a $25.4 million increase in inventory and a $15.0 million increase in other current assets, partially offset by a decrease of $3.0 million in accounts receivable, an increase of $14.9 million in accounts payable and a $1.7 million decrease in accrued liabilities. With our strong cash balance, free cash flow generation and borrowing availability under the 2023 ABL Facility, we expect to have ample liquidity to satisfy our operating cash requirements for the foreseeable future.

Current wording

Our adjusted working capital, which we define as current assets less cash and current liabilities, increased $25.3 million compared to the prior year end. The increase in working capital is primarily the result of a $31.4 million increase in inventory and a $2.5 million increase in other current assets, partially offset by a decrease of $1.6 million in accounts receivable, and an increase of $6.9 million in accounts payable. With our strong cash balance, free cash flow generation and borrowing availability under the 2023 ABL Facility, we expect to have ample liquidity to satisfy our operating cash requirements for the foreseeable future.